Not in the business

Feb 21, 2012, 06:47 am

Media companies deserve piracy if they make life too difficult for consumers. Or do they?

That’s the argument today over a new comic (sNSF) by Matthew Inman of The Oatmeal. The frequently provocative Inman sets his sights on the question of media piracy by presenting a hypothetical case of a young man who wants to watch the HBO series “Game of Thrones.”

Inman’s character, a well-meaning sort, listens to the angel on his left shoulder who urges him to pay for the show instead of pirating it. But Mr. Oatmeal (as I’ll call him), credit card in hand, finds he can’t buy the show on iTunes, he can’t buy it on Amazon, he can’t watch it on the Netflix or Hulu subscriptions he pays for, and he can’t even watch it on HBO’s own website. Giving in to his demon-on-the-right-shoulder, Mr. Oatmeal visits a shady website, downloads a torrent, and is quickly watching direwolves, horse lords and the “Douchiest. Prince. EVER.”

This argument is the moderate “piracy’s not bad” argument. (The radical pro-piracy argument says piracy is a good thing, because charging for information is wrong.) Piracy, the moderate argument goes, isn’t a good thing. But good people who are willing to pay for content are DRIVEN to piracy when antiquated content-providers put roadblocks in their way. If these companies would just let us get our content through simple, one-click purchases, piracy would wither away. Look at what happened to music piracy when iTunes came around, they say — sure, some people still pirate songs, but those are the irreconcilables. Reasonable people want to be able to buy TV shows and movies the way they buy music.

It’s a reasonably persuasive argument.

Note that saying media companies should make their content more convenient because it’s (an intrinsic) good for the viewers and also is (an instrumental) good for the media companies because it will mean more pirates buying their content instead is not the same as encouraging people to pirate stuff — and I think Inman stays just on the “you shouldn’t pirate” side of the line. He’s not saying people should pirate, he’s saying they will as long as it’s hard for them to get the content they want.

But a persuasive argument is not a self-evident argument. Take the reaction from tech columnist Andy Ihnatko, who is sympathetic to Inman’s broader point about content being easier to get. But Ihnatko also takes aim at the person who torrents when they can’t get what they want easily:

You want to see what the hubbub around “Game Of Thrones” is about? Cool. The show is produced by HBO and it’s available exclusively on that channel. It’s a premium channel and any cable provider can sell you a monthly subscription.

HBO’s awesome. They have a streaming app that will allow you to watch pretty much any original series or movie that they still have the rights to (including “Thrones”), and it works with almost everything you’d ever want to stream video to. HBO doesn’t even charge for the app or for the extra access.

You say you don’t want to subscribe to HBO, or even cable?

Ah. Well, no worries. The show will be released on DVD and Blu-ray later in the year.

You’re not into physical media? I’m with you. It’ll be on iTunes soon. See? The store page lists the release date. March 6. You can circle it on the calendar and everything.

You’re still frowning. What’s wrong, Scrumpkin?

Oh. You want it right now.

The person who torrents because they can’t get the content conveniently and right away, Ihnatko says, is just betraying a juvenile inability to delay gratification. Think about how new the ability to jump on a Netflix and watch a streaming episode of a TV show, on demand, is. Or jump a little further back in time, when even being able to watch something on a DVD or VHS wasn’t around — the only way you could watch a TV episode was at the time set aside by the network. And here we are breaking the law because we can’t wait a few weeks or months to be able to purchase something?

Also a persuasive argument.

But the real point I wanted to make is from piece written not this week but over a decade ago, by the late humorist and author Douglas Adams. Writing in Wired in 1998 about the coming effects of the Internet on publishing, Adams notes that “lots of people are not in the business you think they’re in”:

Xerox, for instance, is in the business of selling toner cartridges. All that mucking about they do developing high-tech copying and printing machines is just creating a commodity market in toner cartridges, which is where their profit lies. Television companies are not in the business of delivering television programs to their audience, they’re in the business of delivering audiences to their advertisers. (This is why the BBC has such a schizophrenic time - it’s actually in a different business from all its competitors).

(Emphasis added.)

Take Inman’s particular example of “Game of Thrones.” HBO is not in the business of providing programming to viewers. It is in the business of persuading viewers to pay a monthly fee to subscribe to their channel. Any money HBO gets by persuading people to pay for a DVD (or iTunes download) of their shows is pure bonus. And, importantly, if HBO makes it TOO easy for people to get the content you can only otherwise get by subscribing, then people will stop subscribing. And even the financial reward from selling their content may not be enough — HBO doesn’t just want you to subscribe to watch “Game of Thrones,” they want to then get you to watch “Luck” and “True Blood” and “Boardwalk Empire” and “Curb Your Enthusiasm” so you subscribe all year. And then ideally ALSO buy the DVDs of the shows you like.

On the other hand, a network like the U.S. broadcast networks has more incentive to make their content broadly available. They get their money from advertisers, so if people are watching a show on Hulu or Netflix or DVD or iTunes, that means fewer advertisers and thus lower rates — but this can be recouped by getting people to pay $2 or $3 or $5 an episode for something they would have watched for free. That’s because there’s less of — pardon the pun — a “network effect.” Yes, CBS and ABC and NBC and FOX want people to sit down and watch their network straight-through, all evening, but in these days of channel-flipping they don’t count on it. At most a show gets a lead-in effect, by inheriting the viewers of the popular show preceding it.

The situation is even clearer for movies, who (correct me if I’m wrong) are in the business not of selling subscriptions or advertising but selling tickets. To the extent that movie studios can get someone to pay to watch their movie in one form of another, it’s simply a matter of setting things up to maximize their profit from their movie. And, in fact, you read about movie studies trying things like releasing a movie on-demand shortly after it hits theaters. The resistance they hit comes from the movie theaters, who are generally speaking not in the business of selling movie tickets but in the business of selling popcorn, candy and soft drinks to movie-goers. If a customer watches a movie on demand instead of in a theater, the studio still gets its money, but the theater loses out.

So Inman probably picked a bad example with “Game of Thrones.” However much the consumer (I among them) might want HBO to make their programming easy to purchase à la carte, that’s antithetical to HBO’s business interests. HBO wants there to be one way to watch their content: subscribing to HBO. Now, if you do that, then you get access to HBOGo, which lets you stream their shows on demand. But you don’t get the convenience unless you pay your toll to HBO.

(There’s a bigger question about whether this is a sustainable business model for HBO in light of changing technology and consumer habits. I don’t pretend to be able to answer this.)

Remember: it all comes down to money. It costs money to produce content. So how do you extract enough money from consumers of that content to pay for it, plus a little on the top? There’s more than one way to skin that cat — more than one business two otherwise identical content producers can be in — and some of these business models may be friendlier to consumers than others. Consumers have a right to complain when companies treat them poorly. But they shouldn’t demand that companies run themselves out of business just to make their own lives a little more convenient.